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The Nature of Switching

Last week I switched from Windows to Mac. I have used a Windows computer all my working life and the switch was something I agonized over for more than six months. I wanted the performance, stability and design coolth of the Mac, but I worried that the switch would require me to learn a totally new OS. It would cause me frustration, loss of productivity and just plain wouldn’t work for somethings like demoing our Excel product which is not supported on the Mac. What eventually tipped me over was that a couple of weeks back Microsoft pushed an update down and Windows kept insisting that I restart the machine. I decided to restart 15 minutes before a demo to a prospect to avoid the reminders from interrupting the demo. Twenty minutes and a couple of memory reference errors later, it still hadn’t booted up. I had to reschedule the demo.

But this post isn’t really about Windows vs Mac. While making the switch, I went through a process which set me thinking about the nature of the whole switching process. Some switches are simple and easy – changing your brand of toothpaste, for instance. Some look simple but aren’t. Like switching from throwing kitchen scraps into the garbage to using the green bin for composting (it’s a lot easier with bio-degradable bags now). Buying a new car, a new house or a new computer are very complex switches to make. Most people take these decisions with great care mixed with a large dose of trepidation.

Let’s use a simple framework to understand the switching process a little better. For an individual to switch, their perceived value of Switching Benefits less Switching Costs should be enough to compensate for their perceived Switching Risks.

Switching Benefits are what make you consider the switch in the first place. They could be functional (the Prius’s higher gas mileage will save me money) or emotional (I support Green causes. The Prius helps me make that statement.). This is all the Marketing 101 stuff.

Switching Costs are the costs in time, money and however you perceive negative outcomes, of making the switch. They don’t have to be all quantifiable. Since you are making this decision yourself you don’t have to make an itemized list of costs and benefits in dollars. You’ll just know when the whole thing – Benefits, Costs and Risks – doesn’t justify making the switch.

Switching Costs fall into a few categories. Understanding them will help us understand the nature of switching better.

Relearning

I have used a computer for work and home and entertainment for years. Windows usage was etched deep in my brain. I used its commands without thinking. Mac commands and keyboard shortcuts are similar but different enough that they need relearning. The relearning requires some investment of time. I sat and made a list of all the mac keyboard shortcuts. Luckily they aren’t terribly different. (I haven’t found one to advance one word at a time in a text editor. If someone knows how to do that, drop me a line. Alt+right doesn’t work.)

While relearning you will have to tolerate the frustration that comes with making mistakes and taking longer than usual to get something done. You will have to ask friends and colleagues for help on simple things. You might have to go check help documentation, or god forbid, even call the product support line. For some people, the thought of this frustration by itself, spells doom for the switch. If you remember what it was like when you switched your TV remote you’ll know what I mean.

Sacrifice

These costs are related to features or functions that you enjoyed with your current house, car or computer that you attach some value to, but are willing to forgo. I use Camtasia Studio once in a while to produce screencasts of our product. It is an application of medium complexity that is not available on the Mac platform. This was a known sacrifice for me.

There are also unknown sacrifices. Features that you need and are missing in the new product but you didn’t know that they were missing before you made the switch. In my research prior to buying the Mac I missed out looking for alternatives to Notepad (actually all Windows Accessories) which I used quite a bit. Finding an alternative has not been an issue, but the point is that I did not know of the alternatives prior to making the switch. More about this under Research and Trial.

Performance

Often a feature or function is delivered by two products differently. The same feature in the new product doesn’t work as well as it used to with the old one. Maybe it takes a lot longer to get something done that was dead simple to do before you switched. Maybe the feature doesn’t perform as it is supposed to. A friend of mine started using the Mozy service for backing up his disk. He had to reformat it for better performance (Windows, you know) but when he went to download his files from Mozy, he found that the entire thing was corrupted. Luckily he had backed up on the shared drive in the office.

Integration with peripherals

This category of costs could have been subsumed under the above two categories, but is important enough to be a separate category on its own. This may sound important only for technology products but is, in fact, universally applicable (will the garage comfortably take both our cars? Will the entertainment center sit comfortably in the family room of the new house, or will we have to throw it away and get a new one?)

With the Mac I have had some trouble with peripherals. My Microsoft keyboard and mouse that I use at work is something I quite like. Its taken me a lot of troubleshooting to get it to work right and even then, I don’t get to really leverage the versatility of the keyboard and mouse.

Monetary costs

The difference in prices is probably the one thing that we pay the most attention to. But even here we tend not to do a complete analysis of the costs. For instance, I thought I’d be able to use my Windows license key from the old laptop on the Mac (I plan to run Windows on the Macbook as well for some applications). Apparently I will have to be buy a new copy of Windows because the old one is an OEM copy. Sometimes the add-ons cost you more than they used to or what you expected. For my Macbook an extra power adaptor set me back $85!

Research and Trial

This is a special kind of Switching Cost. It is a cost no doubt, but it is also a cost that helps you assess the other costs and benefits. For a complex product like a car or a notebook computer, this can be a sizable investment. The product vendor can make it easier for you to gather the information for this research (the sales and marketing process, a good website) or let you experience the product (test drive the new Lexus) but you will typically also seek out the opinion of friends and of course seek out reviews of the product on the internet.

Research and Trials is an upfront Switching Cost. It should actually be called an investment rather than a cost. It is carried out prior to making the decision to switch. Effectively, there are two decisions. One, where you decide whether to start Research and Trial and commit the investment. The second decision, to make or abandon the switch may be made at any point during Research and Trial when you feel that you know enough to make the decision.

Research and Trial is interesting for another reason. It has an inverse relationship with our next subject – Switching Risk.

Switching Risk can be simply defined as your perception of the ‘residual’ Switching Costs. Research and Trial uncovers Switching Costs which are deterministic. In a perfect world you would research and trial the product until you knew every single Switching Cost. However that would be too costly for you as well as the product vendor. So there is a good bit of ‘residual’ left. You may not know what’s in there exactly. But you will carry some perception of it. That’s Switching Risk.

There is an important trade-off between the Research and Trial cost and Switching Risk. The more you spend on Research and Trial, the more you lower the residual Switching Risk. But if it appears like the Research and Trial cost is too high, you might not even undertake it.

We now have a framework to understand Switching. I was building up to where I could connect this analysis to its implications for marketers of technology products. But this post is already too long. It’ll have to wait for the next one.

Change can be dreadful if it doesn’t represent progress. If it doesn’t improve our status quo and instead impede our pace of growth, we should quite rightly, introspect change. When change is founded on reasons that are social and sometimes even nebulous, say preference to brand or style over substance – like fast following everything Apple or Steve Jobs – it begins to rile no sooner the cult fades. Practiced ease morphs into pure complexity that was entirely avoidable. Neither can we brush it off saying humans are biologically wired to resist change. Sometimes it’s just wrong choice.

That’s a wonderful analysis laced with humor. However, I have couple of opinion reservations here!

Residual risks will be after you analyzed your initial risks (those which you have not addressed during your initial planning, analysis, execution/elimination). It can be of known-known or known-unknown types. It is not only of the unknown type, like you pointed out in the “Sacrifice” section. I think your unknown analogizes my known-unknown. Or did I miss something?

And I will put the performance scenario under secondary risk. Your friend already have the risk of switching to a new service, which in turn threw up another surprise of data being corrupted.

Simulatenously, I have had my share of switching machines/OSes from Win-98/2K/XP to Linux to Solaris and back to Windows. What pained me more is the brands who come in variety of keyboards (will they do something on it) as from Compaq to Dell to IBM to Lenovo to Sony, everyone has different keyboards, rather than the OS commands.

If moving from Windows to MAC is so difficult (resistance to change!!!!) I can now relate to my mom’s frustration at not being able to operate Yahoo mail effectively…afterall she’s moved from no computer to checking mails, all post retirement!!!

Your analysis is detailed. Thanks to the tech changes, we can now switch to Mac. (though I think I will take a little while more before I can) Apparently these days, 50% of all Mac buyers are switchers!

If you are someone interested in increasing switching costs of your customers for your product, focus on that one or two bigger costs because switching costs differ for different products. Even incorporate elements that increase the switching costs. Take eBay for example. eBay sellers face the switching cost of lack of credibility on a new auction website because all the ‘feedback’ sits on eBay and there’s no way to port it to a new website.

You’ve analyzed switching products you consume. How about switching what you serve – a company, country? The longer and deeper the association, the more emotional is the switch.